Beef Prices Set To Soar

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The hot weather and lack of rain has created a severe drought in the state of Texas, and many southern US states. Last month, 246 of Texas’s 254 counties were under a burn ban, forcing cattle owners to thin out their herds early and place cattle in feedlots where livestock are fattened for market before slaughter.

Beef Central’s Jon Condon reports the USDA’s monthly Cattle on Feed report showed that numbers on feed on August 1 reached 10.626 million, an 8 percent rise on the same reporting period last year.

The number is the second largest August feedlot inventory in almost 40 years. The July cattle placements into feedlots was the highest on record at 22 percent year-on-year, to 2.15 million head.

A report in last week’s Cattle Buyers’ Weekly claims there are no signs that the drought, which is the worst one-year drought in Texas history, will break soon.

Condon claims the drought is applying enormous stress to the US beef production system, while US exports are approaching all-time record levels.

Condon adds the high rate of cow liquidation and the shift of the feedlot inventory forward, from winter into the preceding winter/spring, causes a huge rise in beef prices, which had almost doubled in some cases.

“The bi-annual USDA Cattle Inventory report released last month confirmed that the US cattle herd is likely to continue to decline over the next two to three years, reducing beef production and putting upwards pressure on both cattle and beef prices.”

Lad Linthicum, a lifetime rancher 52 miles southwest of San Angelo, a town in west central Texas, claims this is the driest warm spell he’s ever seen.

“It has been 11 months since receiving measurable rainfall on most of our country,” Lad said. “In comparison to the seven-year drought of the 1950s, back then it rained here and there, but not often enough to make any grass.”

Charley Christensen, general manager of a livestock auction house says there are a lot of people who have shipped every cow they owned. Some of the smaller ranchers have most likely shipped whole herds.

Christensen said even the bigger ranches started selling the older cows first, but now they have started selling middle age cows and young cows. The forced sell-off will take ranchers years to rebuild a cow herd, he said.